Break-even EBIT (with and without taxes). Alpha Company is looking at two different capital structures,...
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Break-even EBIT (with and without taxes). Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with $4 million of debt financing at 12% interest. The all-equity firm will have a value of $8 million and 400,000 shares outstanding. The levered firm will have 200,000 shares outstanding. a. Find the break-even EBIT for Alpha Company using EPS if there are no corporate taxes. b. Find the break-even EBIT for Alpha Company using EPS if the corporate tax rate is 40%. c. What do you notice about these two break-even EBITs for Alpha Company
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